Gold Fields is preparing to lay off up to 1‚560 people at its loss-making South Deep mine‚ marking yet another attempt at restoring the operation‚ which has absorbed R32-billion so far.
“It is envisaged that approximately 1‚100 permanent employees could potentially be impacted by the proposed restructuring‚” said Gold Fields. “In addition‚ approximately 460 contractors could also potentially be impacted.”
South Deep employs 3‚614 full-time employees and 1‚940 contractors.”
The announcement follows a week after Impala Platinum‚ the world’s second-largest platinum producer‚ said it would cut 13‚000 jobs at its mines as it shuts five of its 11 shafts over the next two years to address six years of losses at its Rustenburg mines.
Lonmin‚ the world’s number-three platinum miner‚ has said it will cut 12‚600 jobs over three years as it stops old and unprofitable mines.
Gold Fields has repeatedly revised down its production targets at South Deep‚ which it bought in 2006. On Tuesday it said the restructuring of the mine meant it was unlikely to reach the 480‚000 ounce gold output forecast for 2022.
It is the last mine Gold Fields has in SA and it has run up losses of R4-billion over the past five years as management tried and failed to successfully convert the mine to a large‚ deep-level‚ mechanised mine from the labour-intensive conventional mine it used to be.
“Given the significant impact of the restructuring from late 2017 and early 2018‚ we are unable to quantify the impact of the proposed large scale restructuring on production in 2019 and beyond. Consequently‚ the previously guided build-up plan for the mine (released in February 2018) has a high degree of risk and uncertainty and can no longer be relied upon‚” said Gold Fields.
Gold Fields has taken a R4.8-billion impairment against South Deep‚ giving the asset a carrying value of R20.7-billion.
South Deep’s production in the second quarter was flat at 49‚000oz compared to 48‚000oz in the first quarter‚ despite 261 employees leaving the company during the first three months of 2018 after the departure of 47 management-level employees in the last quarter of 2017.
The mine spent R295-million more than it earned in the second quarter‚ compared to a R361-million cash burn in the first quarter.
Gold Fields said the restructuring had negatively affected morale and productivity.
There was further bad news for Gold Fields’ shareholders on Tuesday‚ with the company warning of a $0.52 per share drop in basic earnings to a $0.45 loss for the first half of 2018.
The loss came from the R4.8-billion impairment of South Deep‚ as well as a $96-million charge in Ghana‚ where it changed to contractor mining‚ incurring a $65-million retrenchment cost and a $31-million impairment of its mining fleet.
First half gold production fell to 994‚000oz from 1.05-million oz‚ with the all-in cost rising to $1‚169/oz from $1‚103/oz a year earlier.
By: Allan Seccombe – BusinessLIVE
Source: TMG Digital.